The EPA Announces Final Rule Eliminating Reference to 2005 Standard, Clarifying CERCLA’s All Appropriate Inquiries
Are you in the market to purchase a commercial or industrial property, or do you work for an environmental consulting firm, or know someone does? Then this article is a must read for you!
On October 6, 2014, the United States Environmental Protection Agency (EPA) issued a Final Rule amending the “all appropriate inquiries” standard under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), more commonly known as Superfund. CERCLA’s “all appropriate inquiries” rule provides important liability protection for prospective purchasers of contaminated commercial or industrial real property.
To qualify for CERCLA’s innocent landowner defense, bona fide prospective purchaser liability protection, or contiguous property owner liability protection, a prospective purchaser must perform “all appropriate inquiries” prior to acquisition of the subject property. A Phase I Environmental Site Assessment (“Phase I ESA”), performed by an environmental professional, satisfies the “all appropriate inquiries” rule. A Phase I ESA generally includes: a visual inspection of the subject property and structures; a review of historic property records; a review of federal and state databases for the existence of contaminated properties in the vicinity and remedial activities at the subject property; and a summary of findings and recommendations for further investigation. Not surprisingly, a Phase I ESA is extremely valuable to a prospective purchaser in not only negotiating the terms of a purchase and sale agreement, but also deciding whether he or she wants to acquire the subject property.
EPA formerly recognized Phase I ESAs compliant with ASTM International Standards E1527-05 and E1527-13 as satisfying the “all appropriate inquiries” rule. However, effective October 6, 2015, only the 2013 standard, ASTM E1527-13, may be used to satisfy CERCLA’s all appropriate inquiries. According to EPA, removal of reference to the 2005 standard, ASTM E1527-05, serves to “reduce any confusion associated with the regulatory reference to a historical standard that is no longer recognized by [ASTM] as meeting its standards for good customary business practice.” EPA delayed the Final Rule’s effective date to “provide parties with an adequate opportunity to complete [all appropriate inquiries] investigations that may be ongoing and to become familiar with the updated industry standard.”
While prospective purchasers and environmental consultants may still use the 2005 standard to meet their “all appropriate inquiries” obligations, it is recommended that such inquiries satisfy the more rigorous 2013 standard. Some key differences between the standards include:
- The 2013 standard’s requirement for the evaluation of vapor migration and the identification of such as a recognized environmental condition (“REC”).
- The 2013 standard’s addition, and clarification, of definitions which may impact the scope of the assessments performed, including, for example, “de minimis” and “migrate/migration.”
- The 2013 standard’s requirement for a more extensive review of agency files, historic property documents, and the like.
Purchasing commercial or industrial property can be a daunting task. From due diligence to contract drafting, the attorneys at LaVan Law have the expertise to guide you and your business. Please do not hesitate to contact our office with any questions related to this issue or any environmental law.